Deck 47: The Economic Impact of Casino Gambling

Question 1

During the 1990s and early 2000s, the Indiana counties with casino gambling had increases in personal income ________ the Indiana counties without casino gambling.

A)significantly greater than
B)slightly greater than
C)significantly less than
D)slightly less than

Answer 1

B

Question 2

The evidence of the net economic impact of casino gambling, suggests that it is

A)significantly positive.
B)modestly negative.
C)modestly positive.
D)significantly negative.

Answer 2

C

Question 3

The city in which a new casino is likely to have the smallest economic impact would be

A)Las Vegas (where many already exist).
B)St. Louis (where three already exist).
C)Kansas City (where two already exist).
D)Denton, TX (north of Dallas, where no casinos already exist).

Answer 3

A

Question 4

U.S. casinos employ about _____ people.

A)37,000
B)340,000
C)1 million
D)10 million

Question 5

The perception that casinos have a dramatic impact on a local economy is

A)without any foundation whatsoever.
B)reasonable, given their size but overstated given the degree of local substitution.
C)reasonable, and in fact, understated.
D)reasonable, and exactly on the mark.

Question 6

If "local substitution" is complete, then the economic impact of a casino is

A)significantly negative.
B)zero.
C)moderately negative.
D)moderately positive.

Question 7

Economists generally do not agree to limit the private and voluntary actions of people, but in the case of gambling, economists will admit that gambling

A)is fun.
B)teaches people about statistics.
C)has external costs, so regulation could be justified for that reason.
D)is immoral, so it must be prohibited.

Question 8

The external costs associated with gambling include

A)the losses to gamblers.
B)the cost of security at casinos.
C)the crowd control problems at casinos.
D)the effects on the gamblers' family.

Question 9

Economic estimates of a "modest upside" to casino gambling suggest that the "local substitution" is

A)zero.
B)nearly, but not totally, complete.
C)slight.
D)complete.

Question 10

U.S. casinos serve about ____ people per year.

A)1 million
B)5 million
C)76 million
D)250 million

Question 11

If a city, like Denver, that is quite far from the nearest other urban area, were to add a casino, the "local substitution" argument would suggest that there would be

A)a moderate economic downside.
B)a significant economic upside.
C)a moderate economic upside.
D)a significant economic downside.

Question 12

If a casino locates in a small suburban/rural area within 20 miles of a larger city that already has a casino, the degree of "local substitution" is likely to be

A)nearly zero.
B)nearly complete.
C)actually negative.
D)significant.

Question 13

Economists generally do not agree to limit the private and voluntary actions of people, but in the case of gambling, economists will admit that gambling

A)can be addictive, so regulation could be justified for that reason.
B)teaches people about statistics.
C)has external benefits, so it must be subsidized.
D)is immoral, so it must be prohibited.

Question 14

Which of the following would not be an external cost associated with gambling?

A)The increase in homelessness associated with casinos.
B)The increase in crime near casinos.
C)The effects on the gamblers' family.
D)The cost of security at casinos.

Question 15

Economists can accept limits on gambling because

A)addiction psychology distorts the gambler's ability to make rational choices.
B)gamblers impose costs on innocent third parties.
C)no one wins in gambling.
D)addiction psychology distorts the gambler's ability to make rational choices and gamblers impose costs to innocent third parties.

Question 16

If a new casino comes to a city that already has one, which economic impact has little to no "local substitution" offsets to consider

A)the construction costs.
B)the employment at the casino.
C)the employment at restaurants near the casino.
D)the purchase of souvenirs at the casino.

Question 17

The degree to which a new casino will have an economic impact reflects the potential

A)local substitution.
B)the addictiveness of gambling.
C)positive externalities.
D)legislation.

Question 18

Suppose you are debating a proponent of casino gambling and they note that casinos themselves pay significant state and local taxes, your response could be

A)casinos actually pay only federal taxes.
B)casinos pay no taxes.
C)the revenue mostly displaces taxes that would have been paid by others anyway.
D)the tax rate on gambling profits is less than on restaurant profits.

Question 19

Psychologists note that addicted gamblers typically

A)enjoy the activity.
B)won significant sums their first time at the casino.
C)lost significant sums their first time at the casino.
D)win as often as they lose at a casino.

Question 20

The city in which a new casino is likely to have the greatest economic impact would be

A)Las Vegas (where many already exist).
B)St. Louis (where three already exist).
C)Kansas City (where two already exist).
D)Denton, TX (north of Dallas, where no casinos already exist).

Question 21

Daily fantasy is legal

A)everywhere.
B)nowhere.
C)in some states and illegal in others.
D)as long as it is on the internet.

Question 22

The operating profitability of casinos comes primarily from the fact that

A)they typically charge an enormous amount for alcohol.
B)they typically have a significant cover charge.
C)the expected value of any gamble (to the gambler)is negative.
D)the expected value of any gamble (to the casino)is negative.

Question 23

The increase in employment associated with operation of a new casino

A)tends to lower the prevailing wage paid to employees in other competing entertainment venues.
B)is usually a source of rapid employment growth in other competing entertainment venues.
C)is matched in part by reduced employment in other competing entertainment venues.
D)is always entirely offset by reduced employment in other competing entertainment venues.

Question 24

Government tax revenues collected annually from casinos total approximately

A)$100 million.
B)$500 million.
C)$1 billion.
D)$10 billion.

Question 25

The percentage of all gambles that casinos are expected to win is called the

A)cost.
B)hit.
C)vig.
D)sugar.

Question 26

Each year, Americans visiting casinos gamble a total of

A)$3 million.
B)$30 million.
C)$38 billion.
D)$300 billion.

Question 27

Gambling is profitable to casinos because the expected payoff of every gamble (to the casino)is ______ the amount gambled.

A)equal
B)greater than
C)less than
D)unrelated

Question 28

If you compute the odds of winning and losing, the casinos

A)breakeven.
B)lose a small percentage.
C)win a small percentage.
D)lose a large percentage.

Question 29

Unregulated competitive markets for services with negative externalities, such as gambling, tend to establish a price for the service that

A)is too low to support efficient use of scarce resources.
B)is too high to support efficient use of scarce resources.
C)supports efficient use of scarce resources.
D)provides a modest stipend for support of recovering addicts.

Question 30

The biggest difference between traditional sports gambling and daily fantasy is

A)traditional sports gambling bets are all settled are clearly observable from the outcome of an event whereas daily fantasy is settled based on a points formula.
B)daily fantasy is always settled in a day, whereas traditional sports gambling bets take a whole season.
C)daily fantasy are much smaller bets.
D)daily fantasy bets are always legal.

Question 31

Unregulated competitive markets for services with negative externalities, such as gambling, tend to

A)produce too little of the service to be efficient.
B)produce too much of the service to be efficient.
C)produce the efficient quantity of the service.
D)produce too little of the service to satisfy the confirmed addict.

Question 32

Casino gambling is a different form of entertainment than a movie in that

A)you sometimes leave a casino with less money than you came in with.
B)you sometimes leave a casino with more money than you came in with.
C)you can get your money back at a casino if you do not have fun.
D)they are not different at all.

Question 33

Daily fantasy has its roots in

A)rotisserie baseball.
B)March Madness (NCAA basketball).
C)Betting on boxing.
D)UFC.

Question 34

Traditional sports gambling is legal

A)everywhere.
B)nowhere.
C)in some states (Nevada, Montana, Delaware, and Oregon)and illegal in others.
D)as long as it is on the internet.

Question 35

Which of the following would not be an external cost associated with gambling?

A)The increase in homelessness associated with casinos.
B)The single gambler's damaged credit rating.
C)The increase in crime near casinos.
D)The effects on the gamblers' family.

Question 36

The question of legality in daily fantasy comes down to whether it is a game of skill or chance. The argument that it is a game of skill is that

A)players can use a skillful and statistical understanding of the athletes they are choosing.
B)players can use the private knowledge that they are hot to time their bets.
C)players can use the private knowledge that they are cold to avoid making bets.
D)people with skill have better luck.

Question 37

The question of legality in daily fantasy comes down to

A)whether it is a game of skill or chance. It is usually legal if it is a game of chance.
B)whether it is a game of skill or chance. It is usually illegal if it is a game of chance.
C)whether the points system is transparent.
D)how big the bet is.

Question 38

Gambling is profitable to casinos because the expected payoff of every gamble (to the gambler)is ______ the amount gambled.

A)equal to
B)greater than
C)less than
D)unrelated to

Question 39

The question of legality in daily fantasy comes down to

A)whether it is a game of skill or chance. It is usually legal if it is a game of skill.
B)whether it is a game of skill or chance. It is usually illegal if it is a game of skill.
C)whether the points system is transparent
D)how big the bet is.